By Ides de Willebois, Director &
Steven Jonckheere, Knowledge Management Officer for IFAD in West and Central
Africa.

Developing an agricultural sector
that is inclusive of small farmers

The demand for food and agricultural
products is changing in unprecedented ways. Increases in per capita incomes,
higher urbanization and the growing numbers of women in the workforce engender
greater demand for high-value commodities, processed products and ready-prepared
foods. A clear trend exists towards diets that include more animal products
such as fish, meat and dairy products, which in turn increases the demand for
feed grains. There is also a growing use of agricultural products, particularly
grains and oil crops, as bioenergy production feedstock. International trade
and communications are accelerating changes in demand, leading to convergence
of dietary patterns as well as growing interest in ethnic foods from specific
geographical locations. The nature and extent of the changing structure of agri-food
demand offer unprecedented opportunities for diversification and value addition
in agriculture, particularly in developing countries.

Restructured or modern markets and value
chains offer a new environment for smallholders, with potentially profitable
opportunities set against higher entry costs and risks of marginalization. There
are about half a billion smallholder farms worldwide. In many developing countries,
the overwhelming majority of farms are small and family-run, and they produce
most of the food consumed locally. Smallholders are also by far the main investors
in agriculture in most of the developing world. However, there is scope for
large scale farmers as commercial enterprises, often in interaction with
smaller scale farmers using institutional frameworks that encourage vertical
integration and scale economies in processing and marketing.

There is a sound business case for securing
and enhancing small-scale producers’ inclusion in agro-food value chains, which
can bring both economic and wider development gains. This requires that
appropriate business models are applied and, where applicable, that this is
done in partnership with producers, the public sector, intermediaries and
development agencies.

Forum for West and Central Africa

The International Fund for Agricultural
Development (IFAD) and the Government of the Democratic Republic of Congo organised
a forum for West and Central Africa from 13 to 16 May 2014 in Kinshasa, the
capital of the Democratic Republic of Congo, to review lessons learned from
IFAD-funded projects in the region. The Ministry of Agriculture and Rural
Development organized and set the agenda for this forum, showing how Africa's
governments are taking the lead in efforts to accelerate rural development and
expand food production throughout the region.

The workshop attracted more than 200
participants, including government officials, representatives of other United
Nations agencies and bilateral development institutions, as well as members of
the private sector and civil society groups and partners from IFAD-funded
projects in the region. In keeping with the United Nations’ designation of 2014
as the International Year of Family Farming, and the African Union declaring
2014 as the Year of Agriculture and Food Security, the forum addressed a
fundamental aspect of the transformation of rural societies which is the
integration of family farming and agricultural sector in order to boost agricultural
productivity, increase the incomes of farmers, women as well as men, create
jobs for rural young people, assure regular supplies of food to urban centres
and ultimately stimulate local economies.

There was a general consensus that family
farming is the cornerstone of national food security. Participants agreed that
there is still a tremendous untapped potential in smallholder agriculture, and especially
among some of its target groups, such as women and youth. Agribusinesses
(small, medium and large companies involved in the provision of agricultural
input, processing, packaging and food distribution) are an essential segment of
agricultural value chains as they link family farmers to urban consumers and
allow for a development that is dynamic, sustainable and which created jobs and
wealth. Building on their respective comparative advantages, the links between
family farming and agribusinesses need to be strengthened through win-win
partnerships. Agricultural policies and development actors have a role to play
in facilitating the development of value chains that contribute to national
food security and the inclusive growth of rural economies.

Three thematic areas were chosen for deeper
discussion on good practices: i) value chain development; ii) technologies and
innovations; and, iii) financial services. Strong links to markets for poor
rural producers are essential to increasing agricultural production, generating
economic growth in rural areas and reducing hunger and poverty. Improving these
links creates a virtuous circle by boosting productivity, increasing incomes
and strengthening food security. The participants identified the following
elements as being key to making value chains work for poor rural people:

-A
good understanding of the market and an analysis of the entire chain;

-Strong
producer institutions;

-Trust
between the different value chain actors;

-Different
business models need to be discussed and a one-size-fits-all should be avoided;

-Access
to finance and inputs is usually a stumbling block which needs to be addressed;

-Certified
seed systems should respond to the local context, but also to the needs of the
market.

IFAD recognizes vast potential to improve
the livelihoods of rural people by developing by increasing their access to a
wide range of financial services and sound institutions. The main points made
during the discussions at the forum were:

-Products
need to be developed that meet the demands of people involved with family
farming, with a specific attention to youth and women;

-Matching
grants should be transitory and complementary with market based credit and
saving services;

-Support
the expansion of rural financial services, especially the physical access and
proximity;

-Support
the dialogue between public and private sector and between Producers Unions and
apex rural finance institutions;

-Microfinance
units should be established at the central bank;

-National
rural finance strategies should be developed;

-Facilitate
linkages with other sources of refinancing that will continue after the project
ends; and,

-Strengthen
business approach and market orientation.

Finally, the participants made some general
recommendations:

-Engage
in policy dialogue on land governance, in order to protect the land rights of
smallholder farmers, especially those of women and youth;

-Set
up inclusive national and regional platforms where different stakeholders can
discuss issues related to agricultural policies

-Mobilise
more public and private funds for the development of smallholder agriculture;
and,

-Put
in place mechanisms to capture and share innovations and good practices.

We would like to thank the Government of
the Democratic Republic of Congo for organising the event and everybody who
contributed to making the eight Regional Forum a real success.

About IFAD

The International Fund for Agricultural Development (IFAD) invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience. Since 1978, we have provided grants and low-interest loans to programmes and projects that have reached several hundred million people. IFAD is an international financial institution and a specialized United Nations agency based in Rome – the UN’s food and agriculture hub.

Disclaimer

The opinions expressed in this blog are those of the authors and do not necessarily represent those of the International Fund for Agricultural Development (IFAD). The designations employed and the presentation of material in this blog do not imply the expression of any opinion whatsoever on the part of IFAD concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The designations “developed” and “developing” countries are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process.